Editor’s Note: Perhaps the biggest scandal about the Wall Street crash of 2008 was that many of the financial practices that led to the collapse weren’t specifically illegal, though they amounted to insiders gaming a vast gambling casino where obscene sums of money changed hands.

Plus, rather than generating money to finance new factories or other productive endeavors, these exotic “instruments” did little more than pay for the extravagant lifestyles of brash hedge-fund “boys” and other Wall Street operatives who bet "right," with some of the leftover cash greasing the political wheels of Washington, as Michael Winship notes in this guest essay:

Goldman Sachs is the Blackwater of finance, the latest in a long line of companies you love to hate, like AIG and the Dallas Cowboys.

Or, as Rolling Stone’s Matt Taibbi infamously characterized it last year, the financial behemoth is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Honestly, Matt has to cut down on his couch time watching The Discovery Channel.

Nevertheless, hit “refresh” on any financial news Web site and you’re likely to get yet another revelation of the firm’s colossal and impressively varied shenanigans.

On Friday, Susan Pulliam reported on the front page of The Wall Street Journal that, “A Goldman Sachs Group Inc. director tipped off a hedge-fund billionaire about a $5 billion investment in Goldman by Warren Buffett's Berkshire Hathaway Inc. before a public announcement of the deal at the height of the 2008 financial crisis, a person close to the situation says.”

As the Journal notes, the Buffet deal came at a key point in the Wall Street collapse, restoring confidence in the markets and lifting Goldman’s stock from a 40 percent slide to a 45 percent surge.

The hedge-fund billionaire in question is Raj Rajaratnam, whose Galleon Group currently is embroiled in one of the biggest insider trading scandals in history: 21, including Rajaratnam, have been charged; 11 already have pled guilty.

The same day’s Financial Times reports a potential conflict of interest surrounding Goldman’s role in the refinancing of Lloyds Banking Group, 41 percent of which is owned by the British government – an arrangement made to rescue Lloyd’s from the financial meltdown.

Goldman Sachs was both an investor and underwriter in the Lloyds refinancing. According to the FT’s sources, Goldman got last-minute changes made that increased interest on bonds being exchanged in the deal and was involved in discussions determining which bonds would receive highest priority in the exchange.

Top ranked was a bond in which Goldman had invested, perhaps, one source said, buying as much as half of the issue. Goldman insisted its position was “not substantial.”

All of this, of course, a week after the Securities and Exchange Commission charged Goldman Sachs with committing a highly sophisticated fraud, making big profits on the backs of struggling home owners, packaging their soaring mortgage debt as exotic investments some at Goldman knew would fail.

Already, foes of Wall Street reform are picking away at the SEC charges, and whether or not the accusations will ultimately stick remains to be seen – it’s a very complex and nuanced case.

The Washington Post reports that the two Republican members of the commission questioned the strength of the case and voted against bringing the complaint, expressing skepticism “that the evidence showed that Goldman had misled its clients because the investors were big, sophisticated firms who should have known what they were doing.”

But the Democratic commissioners and SEC chair Mary Schapiro “argued that Goldman should not escape accountability simply because its clients were big firms. They said the evidence showed that Goldman did not give clients crucial information about the investment that likely would have made them think again about placing a bet.”

Others claim that investments like the one in the Goldman case, a swirl of so-called “synthetic CDO’s” (collateralized debt obligations) is so newfangled and complicated, very few of even the most knowledgeable financiers actually understand it.

And those who do are not in a position to offer an objective opinion to investors because they’re already working for companies like Goldman.

The GOP opposition to the SEC’s complaint came just days before federal campaign finance filings were released on Tuesday. In March alone, Goldman Sach’s political action committee donated $167,500 to Republican candidates and fundraising groups and $123,000 to the Democrats.

As per the Web site Politico.com, “That March total alone – coming ahead of a major Wall Street reform bill – is more than the firm donated to political campaigns in the previous year.”

A pox on all their houses.

So thinks Bill Black, the one-time federal regulator who cracked down on banking during the savings and loan crisis of the 1980’s, pursuing the guilty with the tenacity of Inspector Javert in Les Miserables. He now teaches law and economics at the University of Missouri/Kansas City and wrote the book The Best Way to Rob a Bank Is to Own One.

Black spoke with my colleague Bill Moyers on the current edition of Bill Moyers Journal on PBS. He questions whether the SEC and the Obama White House – don’t forget, Goldman Sachs was Obama’s largest corporate campaign contributor -- will fully push for answers in the Goldman fraud case or any others.

“Is this administration, which still has some Bush holdovers in it, and now has a lot of Goldman people in it, is this administration going to be able to pass judgment on Goldman Sachs?” he asked.

“They haven't kicked into gear fully, or they'd be naming [Goldman CEO and Chairman Lloyd] Blankfein and other senior leaders of Goldman. And they've only gone after a junior person… If they were really in gear, there would be criminal charges here. And if they were really in gear, there'd be a broad investigation, not just of Goldman, but of all of these major entities.”

But, he added, if you’re sitting in Congress or the White House, “Do you want to look at these seemingly respectable, huge financial institutions, which are your leading political contributors, as crooks?”

If Black had his way, he’d enforce a three-strike policy.

“Three strike laws, you go to prison for life, if you have three felonies,” he said. “How many of these major corporations would still be allowed to exist, if we were to use the three-strike laws, given what they've been convicted of in the past?”

That will never happen until the corporate clout of cash is removed from the American way of governance. Bill Black recalled a slogan he and his colleagues invoked during the savings and loan crisis: “The highest return on assets is always a political contribution.”

Maybe that new $100 bill should read, “In Fraud We Trust.”

Michael Winship is senior writer of the weekly public affairs program “Bill Moyers Journal,” which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.

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